What Should Google Do Next?

T24 Tsang Hang Fung, Wong Hong Lee, Chan Hoi Wai, Fok Tsz Yan

What should Google do next? Google Inc., which was established in 1996, is an American company in information technology industry that mainly provides search engine function to the Internet users in the world. Besides search engine, it also provides Gmail, Google News and Google Map such products and services. Since its establishment, Google has never changed its mission: to organize the world’s information and make it universally accessible and useful. This mission has always served as a guideline when Google develops its operation and development. However, Google cannot remain the same as other competitors, like Yahoo! will excel it if Google does not make improvement. In this report, two suggestions of Google will be discussed. One is that if Google will stay focused on its distinctive competences and develop more superior search solutions. Another is whether Google will expand into new arenas, like building into a portal or extend in e-commerce. In the following, it will be justified that the former one outweighs the latter one. First and foremost, option one is consistent with Google’s corporate values and philosophy, “It’s best to do one thing really, really well” and “Great isn’t just enough”. By devoting the company’s resources in the further development of the search engine, Google can additionally improve its already nearly perfect search engine by listing more relevant results. The second advantage is that Google can increase its market share. The focusing strategy in the future of Google should be luring users from competitors so as to increase the market share in the relatively fixed market pie. With reference to a recent research, 59% of the interviewees will switch the search engine occasionally. This may due to the fact that they cannot get the desired results from the first few websites suggested. With the improvement in the searching solution, it is expected that people will browse the website with much more satisfaction. The number of people using Google as their preferred search engine will be increased due to “word of mouth”. Thirdly, much more revenue will be earned if Google improves its search engine. As Google can retain users by providing the most suitable results in search engine, a huge pool of users will have the incentives to stay loyally with the web. With more users, click-through rate and thus revenue from the paid-listings are expected to increase consequently. This can further attract more potential advertisers. Similar to other search engines, like Yahoo!, advertising is

T24 Tsang Hang Fung, Wong Hong Lee, Chan Hoi Wai, Fok Tsz Yan

the major source of income. Continuous improvement in search engine in order to absorb market share in both users and advertising market will be the core activity for Google to stay profitable in the long term. Last but not least, according to the survey conducted by the Thomson Research, the most important criteria for choosing a searching engine in the eyes of Internet users is the relevancy of searching result. This again coincides and supports Google’s decision to stay focused on developing the superior search solution. The entire above sounds perfect; however, roses come with thorns. The biggest disadvantage of this plan actually comes from the objective external environment. As mentioned above, the online searching industry is in a rapid growth stage now, but that would not go on forever. In other words, the use rate of Internet by new users will start to decline. This implies that the growing potential of this industry will soon come to an end. But this actually justifies Google’s decision to focus their resource in improving the search engine. By improving the searching devices, Google can then differentiate and stand out from the competitors and capture most of the existing customer base. In this way, Google can survive in such a crisis. After discussing the first option, the second option is evaluated. That is whether Google will expand into new fields like transforming the pure search page into a portal or not. The advantage of it is to build a comprehensive image. The main focus of the business right now is still search engine, but it can be further developed into a portal like Yahoo! to provide more value-added service to Internet users. By doing this, the information on the World Wide Web can be organized into a more comprehensive and user-friendly way to its users as Google can categorize the information into different channels, for instance, Health, Shopping and Life style, in which users can find the specific areas like health-related materials they demand by just one click. Again, this change is consistent with its mission: to organize world information and make it universally accessible and useful. As a result, the expansion can provide more values to end users and keep its corporate image. Although this option can build up Google’s image, there are some drawbacks. First of all, Google may not have enough ability and capability to compete with Yahoo! by building into a

T24 Tsang Hang Fung, Wong Hong Lee, Chan Hoi Wai, Fok Tsz Yan

web portal. Yahoo! is a full-fledged portal which offers a broad range of services beyond Google’s, including Autos, Games and Movies. Yahoo! has organized those information into thematic channels which is more user-friendly. If Google follows the footstep of Yahoo!, it will be hard for it to compete as Yahoo! has long positioned as a web portal and has devoted much investment in it. Google needs further development if it is built into a portal. Moreover, Google even does not have enough human resources to do so. According to 70/20/10 rule, only ten percent of engineering efforts will be allocated to new businesses. Hence, Google might not have such manpower in developing the new web portal. More importantly, it will violate the flexible structure of Google. To encourage fast communication and rapid execution, Google has a very flat structure that engineers are working in teams of three to five. This can minimize the middle management and flatten the hierarchy of company structure. Nonetheless, when Google becomes an intermediary in ecommerce, different departments have to cooperate together and will lengthen the decisionmaking time and execution time. This will immensely affect Google’s pliable structure. All in all, the two options available have their own benefits and shortcomings. Although improving the search engine can potentially increase the ad revenue and capture more market share, it cannot diversify the risk by focusing in just one area and the searching industry is foreseen to be mature in the coming years. While expansion allows the information be comprehensively organized, but the ability to compete with other portals like Yahoo! is doubtful and it will destroy the current flexible company structure. By comparing the two options, Google should focus on improving its search engine furthermore rather than expansion as the former option reinforces the corporate image and is less risky compared with stepping into a brand new area like web portal.

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